Two years after an unsuccessful bid by News Corp for US satelliteleader DirecTV, Rupert Murdoch awoke today (Apr 10) secure in the knowledgethat at last the cat appears to be in the bag.
Yesterday the media mogul announced News Corp had signed a dealworth approximately $6.6bn to take control of DirecTV through a 34% acquisitionof DirecTV's parent company Hughes Electronics, itself a subsidiary of GeneralMotors (GM).
Pending approval of the deal by financial regulators, Murdoch willbecome chairman of Hughes Electronics while News Corp advisor (and former co-chief operating officer) Chase Carey assumes the role of president and chief executive.
While the deal gives Murdoch his cherished foothold in the USsatellite TV market through DirecTV's 11.3m subscriber base, independentcontent providers will be anxious to see how the latest media consolidationaffects their businesses, particularly since his worldwide necklace of satellite operations gives him an unparalleled grip on post-theatrical film distribution.
Analysts have speculated thatMurdoch will expand DirecTV, drawing on News Corp's programming stockpile to create new channels in a bid to further erode the audience share enjoyed by the US cable operators.
As well as being the dominant satellite TV force on the North American continent, DirecTV is the US' third largest pay-TV provider behind cable giants Comcast Corp and Time Warner Cable.
"With Fox taking a significant interest in Hughes, we areforging what we believe will be the premier diversified entertainment companyin America today, with leading assets in film, television broadcasting andproduction, cable programming, and now pay-TV distribution," Murdoch toldreporters yesterday.
"General Motors is pleased to have reached an agreement withNews Corp that provides substantial value to our stockholders and puts Hughesin a position to capitalise on the future growth potential for direct broadcastsatellite television and other related services," GM president and chiefexecutive Rick Wagoner said in a statement.
Internationally, the deal extends News Corp's satellite empire.The conglomerate enjoys market share in key territories through BSkyB in theUK, Foxtel in Australia, Star TV in Asia and the Middle East, and SkyTel inLatin America.
Under the terms of the deal News Corp said it would buy GM's 19.9%stake in Hughes and offer to buy another 14% from Hughes' public shareholders.Cost is understood to be around $14 per share, a 22% premium over Hughes' $11.48closing price yesterday.
Rival satelliteowner EchoStar Communications Corp appeared to have won control of DirecTV in2001 when it outbid News Corp in a $30bn deal with Hughes. However, regulatorsquashed the deal last year.